tv Best of Bloomberg Technology Bloomberg July 8, 2017 6:00am-7:00am EDT
just as the model 3 hits the why have the sales shifted down again it? a massive deal in the digital payment space. they have bought world pay for $9 billion. this comes after j.p. morgan showed interest, but backed away. the u.s. credit card processor will grade gator exposure to e-commerce and small businesses through this acquisition. and his partner joined us for reaction at to deal. : why cincinnati, ohio? let's interesting to spin off from this tells you the history of the business of payment
transaction and what is happening is the way this business works, when you use your credit card, they find it if you've got the money in your bank account and they approve the credit or not. there are a number of steps that happen behind the scenes. each of those steps takes a different chunk. you get the verification from the merchant and the movement of the money between the merchant and the bank and the verification, when you go through the steps, there is money taken each hard way. it results in billions and billions of dollars. hasmovement of commerce gone from physical stores to online. of the payment infrastructure and the service has changed. that's why you see inventive -- ntiv making this move. caroline: they have one of the biggest portfolios out there in
your. isn't all about the graduation of payments? >> that's a big part of the story. big market and its growing fast as we go from cash to card and online. the story is very much a part of that move. online,ransactions are it's very much part of the dna. they have a very big global presence in asia. that is part of the story. this had been focused on more traditional brick-and-mortar. that had been under attack under more online. haveay to do that is to the main one being commodity
based in holland. it is very much plane on the new globalths of a footprint and offering an omni channel offering online. that has been very important to us. caroline: it's interesting that this is the key move and we are hearing of a portfolio company, what about other m&a? interestingly, it wasn't the only suited to begin with. jpmorgan was looking at it. a numberre have been of acquisitions in this area over the last few years. we have seen the traditional companies have more exposure to e-commerce. we saw heartland acquired. that was for nearly $1 billion. there was a deal today for
nearly $10 billion. let us not forget the very specific action that amazon took in going after whole foods. shares dropped on that area they antiv to do their transactions. they are not mentioned in the report. one of amazon said we are going to stick with the existing payment structure. we'll use our payment processor which is j.p. morgan. the competitive space here is quite alive and you can see that the m&a going out, they are trying to buy the new company with the notion that the e-commerce companies are kingmakers, none more so than amazon. caroline: it's interesting, we saw another deal in europe, a
danish company saying it was bought by americans. what about the company having your port folio, good m&a be the exit route? to seeould like for this potential in be as big as it can be. we feel europe can build these $10 billion companies that can stand alone. they have a very large what brent -- footprint. they don't need a backer to go all the way. that has been the pitch from the get-go. that is very much what we're focusing on. johnson: that was cory and martin. facebook could be the next target for antitrust watchdogs. germany is examining whether facebook is taking advantage of its popularity by pushing users
into agreements they might not understand. we discuss what is next for , -- release.lators >> privacy is more important in europe to regulators. there are more rules and regulations in that region than in the u.s. this combines antitrust and privacy in the one charge here. want to saying if you get in the social network, facebook is probably your only choice in the western world. that dominance over data is signed up for these terms and conditions. caroline: the debate commences. sometimes scale and size is good to the consumer, but it seems here determined to give a
feeling that it's making facebook too pushy. this investigation was announced i can march. does it mean anything from a real perspective? there, is happening over anything can go right now. who's to say they won't crack down on facebook. at the same time, you are hearing her encourage other companies to sue google. anything can happen. it's interesting to go after the privacy angle. now, it's tough to say. it's a wild card out there. caroline: when you are looking at it from here in london, this is a german antitrust authority looking at facebook. they are saying it may be time for others to start.
it might, the fines don't matter. i'm not sure the monetary value of these fines actually make a difference for the company's themselves. i do think one goal of the regulator is to say all. it signals to the rest of the market that there is a watchdog, somebody is paying attention. somebody is trying to preserve competition and preserve user privacy or the benefit for consumers. a lot of this is signaling. a lot of this is perception. watch really going to make companies care? it's really arbitrary. the point is the industry and the sector knows that small companies trying to come up might have a chance and don't give up and don't think you can't compete. don't think there is not a level playing field. caroline: talk to us about how
the tech giants are interpreting commissione european whothe german antiauthority are working on facebook here. is this about increasing competition? facebook case in , it's a real overstretch, taking an antitrust argument which understandably in europe is different than the u.s. and applying it to have a c -- privacy is a leap. on the google side, there was kind of an era resignation. they do say that they are considering an appeal. the comment that they put out this time versus a year ago were
less combative. nation, an air resting especially when it comes to more pure antitrust cases. caroline: i just want to get your thought of someone who is looking at potential value for these companies. it make facebook, as you worry about your price targets for these companies or not? >> not yet. we put out a note on google saying this is overreach. i always joke around saying if you don't like the privacy, don't use the service. that's what we do here all the time. ultimately, i am most interested -- our worry is we see in action from the united states. we are in a position where we see a pattern of going after and
trying to change the way these companies do business. there is no recourse or any response from the united states government at that point. isoline: you think this european regulators completely overstepping the mark? you don't think there's any reason why they should be trying to level these accusations? >> i think they are picking the wrong battles. thesen make the case that of all done something wrong at some point or another. i think the battle they are trying to win it with the vertical search with google, they have done a lot worse. when they scraped yelp content and used it as their own, that is a lot worse. what i would like to see is what the u.s. responses. that would affect my rating and
the firm backs some of the biggest successes. they joined us to discuss the current landscape. when we started two years ago, that was a big precedent. especially with our position around the creative class. this is a great example of technology and creativity. post-brexit, there were some questions. forward was going more what kind of opportunity will you be able to find in london? based on the way we work, we go after opportunities based on when they are. we don't expect to do everything on home turf in london. we met somebody in portugal. find this and
convince the entrepreneurs to work with this irrespective of location. caroline: what are you focusing on with the second fund the? where are the opportunities? ourt's a validation of original a couple of years ago. without company for the long-term, it takes up to 10 years to build the company. we are humbled by the interest from the investors. have theem is we opportunity for a venture firm that is focused. brands, ance of new are investing the way we lead our lives. there are different lifestyle segments from fashion to food and well-being. everything is changing. we are looking for those founders who have a sense of
what people want, who are building communities and where we can help them build business. caroline: you will be watching. what level do you see yourself going at now? that is bigger than a c brand. these numbers keep getting bigger each time. dogmatic about being the first investor. we want to back the best founder in the segment. this is where we can see a big opportunity. caroline: how are you seeking them out western mark -- out? >> we look at data, signals. these days, using social media you can track and measure customer love with the number of flags on instagram and twitter. we are very founder centric. , we likeo see passion
to see a motion between consumers and product, service, or brand. we combined art and science and our business is about making decisions much later. it's not black and white or it it is always great. caroline: last time it was unilever, is it institutional money western mark -- money? two years ago was very high. even to our surprise, the investor base was very traditional. people understand the venture business. because they back thought we were offering something different. up, there hasng been a slew of tech ipos as the market returns to form.
as we have seen with other types of things, we are more insulated in increased valuations and decreases as well. when companies have gone public and listed, they have been through extra rigor because there has not been this enthusiasm that is unchecked like we see in the states. last year even though numbers were down, we had offerings there were more resilient than listings in new york. i do think it bodes well. we are going to see a lot more coming from financial services. there will be other sectors as i was saying earlier. maybe not so much e-commerce, we will see other sectors coming into the market. caroline: your take from the slightly more meager blue apron. as that shaken the rest of the ipo market? do they look across the pond and
see how it's faring in germany? maybe blue apron is a one off. area i more pessimistic do agree that there are sectors like financial and software that are more conducive to ipos. at the same time, we are where -- below where we were a couple of years ago. hard, istries that are think those are going to be facing greater scrutiny. ist is going to be a test when you look into it, are they going to go direct? is the game going to change? these are things we don't know yet. caroline: talk about the game changes. we saw snap change the game. that is another company that james analyzes. they cap all the power with the ceo. they are not raising a more
money, just coming to the market. what do you see from companies coming through? generationthis next of companies that started with google when they came to market and zuckerberg when he brought facebook, there is a huge appetite from the market for really solid tech companies that have fundamentals. people are willing to concede for publiclys listed companies in order to get value in the business. i don't know if spotify will drop it off. -- put off. dropbox will try to do something that gives them and it antigen or an incentive to list. we are seeing uber and other companies. otherwise, they will raise money on private markets. i think control is going to be a big thing.
options,ion of status, preference rights. how much they might have to yield and disclosed in the listing, if they can stay within regulator rules whether they have to be as transparent, they may share social media without having to go through pages of disclosures. caroline: how hard does that make your job? you have to go through steps listing. -- snap's listing. what do you see when you looking at the rules of the game changing? if i was in a private company, i would not what to go public. it's not easy. at the end of the day, i don't have to analyze companies that are private. i just need and it notes and
information flow in order to assess the public companies. that comes from relationships and so forth did it doesn't really change my life all that much. caroline: are you looking for dropbox this year? are you looking at names it might be coming to the u.s. market? obviously, there could be some others. the one i am keeping my eye on the most is spotify. a new forecast says electric cars will outsell fuel powered vehicles by 2040. according to bloomberg, battery prices will plunge. the auto industry will be turned upside down. about economic turmoil for oil exporting companies. how tech firms are planning to
♪ caroline: welcome back to the "best of bloomberg technology." the composition and digital speaker assistance is getting more intense. alibaba has unveiled an echo-like device. hello chinese internet giant tencent and samsung have developed their own ai powered speakers. on thee with mark gurman. growing artificial intelligence landscape for your home. trial, for the first 1000 orders, i'm curious to see
how high the price goes, or even if it will be one of 1000 people rushing to buy it. i'm sure there will be given how big alibaba's spread is across asia. this year, 2017, has become the year of the digital speaker. >> and everyone wants in. samsung once in. ants in.w larry seeing this drive? what do the companies want in their ecosystem? >> he saw amazon and google jump in last year with update to the echo line. lots of new elects a devices -- alexa devices. the echo show has the screen and the echo look as well. it's more of a style guide for your wardrobe. apple, they announced the home pot for $350. tryinge players in china
to jump in. why do they want these? apple, the home politics advantage of apple music and siri and home kit and their home-based services and streaming services where they are trying to make the bulk of the money in the future as far as sales. peoplemportant because really want smart speaker's. pc the demand for al -- you see the demand for alexa. apple does not create their own, or if others don't create their own, people will buy amazon products. exa, might really like al maybe i should subscribe to prime music or video instead of apple music in itunes and buy an amazon fire tv instead of apple tv. if apple does not create their own and other players don't create their own, they risk losing other product lines to other companies. caroline: let's go to vc tech.
when you see this rushed for ai, you say how driverless cars is the hottest investment in the last four months, is ai a good investment? >> i think it has been a good seen a lot ofave startups in that space. on the smart speaker side we have not really seen anyone. .ery few startups we have not really seen anything going after that. i'm a skeptic on the home smart speaker area we do not have an ecosystem growing up after them. them,tential investor in what is the retention? what is the engagement with those? i have had one for six months. it is collecting dust.
i'm a little bit of a skeptic because of that. --hink the pure interface your voice interface is a little simplistic. what can it actually do? that is the reason why they have been adding a screen now. if you have a screen and the speaker, it is just an ipad to does not move. i don't really understand it. i believe it is a complement to other things as an interface, but the simple voice interface device in the home -- caroline: he go to the app -- you go to the app developer conferences. other not managing to entice enough damage -- developers on board? is a very good question, very interesting. voice platform is not open to developers where one
startup to make a speaker device and input siri on top of it and other unflavored to it. microsoft and amazon have recently started offering their voice service to be used on other startup devices. you see harmon coming out with a speaker in the fall that runs microsoft's cortana and a bunch are using alexa. the bigger story here is the services that go with these voice-activated systems. it is what kind of using to you wanted this -- want to subscribe to. tos about keeping players their customers, sticking them together in his ecosystems. the last thing apple wants is for people to use an iphone and and alexis speaker -- alexa speaker and a pc. they want to bulk up the ecosystems and have everyone on their own platforms across the different devices, and the
speaker is just one component of that. caroline: that was mark gurman. stories of sexual harassment in the tech industry continue to come out. tech startups throughout silicon valley have been brought by numerous sexual misconduct allegations, resulting in several resignations from tech investors. the latest one coming just this week from dave mcclure. remain onon still how they connect three change in the male-dominated sector. jenna sarah, who has written for the new york times, wrote about this topic in his column this week. joining us is martin mignon. >> it is so pervasive that there are studies that show that 60% of the women who were polled said they had had to do was some
form of sexual harassment. i would say that is pretty darn pervasive. it has gone on for years because the power imbalance between a venture capitalist who has money and a female founder who desperately needs money is immense. as powerful as the ceo and another link -- an underling. especially after susan fowler wrote that incredible blog post about her year at uber, which launched the decline and fall of travis kalanick, that women have started to come out and not talk in vague generalities, but usernames on the record and name the people who harass them. there has been an explosion over the last two weeks in silicon valley over this. job so been lost.
there will be more explosions because women are going to keep talking about this. more names will come out and more jobs will be lost. >> what i am fascinated with is whether this is something that is been talked about in europe much. i have been in silicon valley for a few months, but it does not feel like perhaps we will get the exposure here. and i'm wrong? >> i'm afraid you are wrong. mentionednce that joe to the fact there are way more men than women in the vc industry in the tech industry as it is in europe an as it is in the u.s. this issue of imbalance i'm afraid will be the same here as well. caroline: you think therefore they are jobs that need to be lost in europe and asia to start to see the harassment element start to come away, but also the discrimination in diversity? >> i think what has been
happening in the past few weeks and months has been a cold arms for the industry. we will see a lot of behavior and every brave behavior from these women if they are to speak up. clearly this is moved to the top of priority lists. i'm sure across the industry. femalex we have four investors as part of a 20 person investment team, which is not terrible but we should do much better. we don't have female partners which is not really a good thing. we really need to make it a top priority to expand the female professionals. we are taking that really seriously. caroline: joe, your pieces fascinating. -- your piece is fascinating.
it takes brave women to come on -- come out and take on the startups. we have seen it affect other industries and maybe we will start to see harassment decline, but do we see diversity pick up as well? are we starting to see all of this coming to change in silicon valley? >> in a weird way to harassment is easy problem to solve because it is such an offense that if you make the consequence, you will lose your job and your reputation, people, men will stop doing it. that is with other industries show. gender bias, getting women on boards, getting more women founders, that is much more difficult. although i will say one of the reasons that all this has been coming out that was because there are a lot more women founders than there were in the past. there is an increasing number of women who want to get into technology.
♪ caroline: tesla stock fell back this week. analysts have growing concerns of the committee reported deliveries flatlining in the second quarter. goldman sachs issued notes saying the demand for the company's higher-priced model s sedan and model x might hit a plateau. we started off by asking how important the company's upcoming model 3 will be for investors. >> we can look at the s and x
sales, but the model3 is this make or break product for tesla. over the weekend we heard from elon they will ship about 30 model 3's this month. the good news is the car is arriving much earlier than tesla products tend to arrive. it is almost on-time. the bad news, of course, they are talking about hand making 30 cars and this is definitely not mass production like we're used to seeing from other automakers. but over the next year to two years it is how the model 3 sells doubled if i tesla. if you are an investor, deliberate the share price makes any sense is that the model 3 does well. caroline: when looking at the slight selloff we saw today in tesla share price, that seems to also be digesting those numbers we got late monday, prior to the
u.s. holiday. they did seem to disappoint. is there an issue that potentially that there is a plateau going on here? ashlee: tesla seemed to blame some of the lackluster sales on trouble getting a battery pack into production. there has been a concern that is been haunting the company forever. how many rich people are there that can buy a car that starts at about $100,000 after you start equipping it with a few things? you look around silicon valley where i live, i'm amazed to see how many are out there. there are more wealthy people here than i ever imagined. you wonder how this plays out globally. maybe, finally, it is starting to stall a little bit. that is where they maker much higher margins than it will make on the model 3. it is a problem that stalls out. caroline: will it eat in to
demands? will people rather go for a $30,000 car that has the tesla finesse to it? our with a r -- our with a -- or would they rather go for the model s and x? ashlee: you still get this amazing gadget. elon has been pushing hard for people to realize the model x and s are luxury high-end vehicles. if that's what you're looking for, that is where you should go. these earlyquestion adopters and people into technology and want to get in to tesla, the model free will be the obvious way to go. -- model 3 will be the way to go. not the eased down version of the model s. it is a much lower in car but it
will be tough to convince people of that. caroline: what will elon musk he doing to convince? he is a man that takes to twitter. that is his way of speaking to the masses. how will he try to negotiate these bonds in the road? will he go out fighting? you are the man who has written on him. ashlee: he is relentless about these things. part of it is the shine. the model x and s have become a status symbol of sorts. i think that will carry on. there will be people who just want to buy the best thing that tesla is selling. and elon will be out there having huge events for the model 3. we see him on twitter all the time talking about, yes, we have this car coming but let me tell you about the model s and model x. he is relentless about this stuff it has a gift the other carmakers don't have which is his twitter account is immense free advertising and it's very
powerful. the you think they can push forward in meet these very lofty expectations that are currently being baked into the share price? ashlee: in my gut, no. tesla has struggled with manufacturing for years. thee know anything, shipment numbers almost definitely will come in under what the company is having is think about. with the share price this can be based on a six-month thing, how many model 3 do they ship through the end of the year. story one-year, two-year if the company can make these cars efficiently. make them at high quality. in the tesla story gets very good. if they struggle over a long period of time, is a huge issue. all the competitors are coming with electric cars. their quality is very high.
everyone is that tesla's disadvantage. it is a two-year story we are looking at. caroline: elon remains the number one shareholder. he has more than 20% of the company. he has got skin in the game. does the investor base ever worry about the fact he has got so many other distractions day?ng at spacex one how can he remained so focus? ashlee: i think people worry about this. give we have seen anything overtime, the companies are getting better at delivering on all the things that you want promises. caroline: coming up, amazon's deal to acquire whole foods is shaking up the market. what will they pick up next? if you like bloomberg news, check us out on the radio. you can listen on the bloomberg , and onp, bloomberg.com
caroline: amazon's acquisition of whole foods took many by surprise. we continue to question which industry the tech giant will disrupt next. he thinks amazon can encourage on the territory of restaurants and the entire prepared food and delivery market, doubling up on the grocery opportunity. he discussed his outlook. my thinkingno way in our thinking is in line with what jeff bezos is making. he is probably several steps ahead. in thinking about that, work in the opportunities be, and thinking about how they can leverage on the whole foods infrastructure today. here are a couple of things we know.
the restaurant business is an $800 billion business, which is bigger than the grocery market. digital penetration of digital food sales is over 20% in china versus 2% in the u.s. the margins are ripe for the taking. we thinkhat together, we can be in a situation where amazon can leverage their data, their analytics, and predict the eachof preferences of the -- each individual market, leverage whole foods to act as a commissary, slash the margins to 0%, and then attentional celebrity chef tie-in dishes at five dollars a pop for prime numbers. you could potentially open up a whole new array of food services beyond delivery and grocery. >> wow. as aere just talking about seed investor perhaps not the time to be going into the food delivery companies, even though
it might be the time to look at delivery or this ipo. do you see this sort of potential for the restaurant chains themselves to be disrupted by technology delivery? >> absolutely. there are other categories that amazon might go into for brick-and-mortar stores. i don't think it will end with food. it's about the infrastructure and logistics and supply chains. there are other critical categories for amazon can go retail. as a seed investor, we do predominantly tech, i am less of an idealist and less visionary and even james and certainly jeff bezos, but i think about what amazon has done on the back end of everything. it is not just logistics for food products or otherwise, whenever think they have done for storage, cloud updates. i think it was a lot more they can do even on the back end that will surprise more and more people. caroline: when you're looking at
amazon, give us what you see the potential in terms of price target, where you currently stand on the company, and a little bit about the restaurant area and some of the other sectors that it could disrupt. james: we are neutral rated on taking a position on the stock because of this regulatory overhang we talked about. theoretically you can easily make a case for the stock to move at least 50% higher from here based on where the numbers are. the margins are improving. the theoretical margins on the retail side as those businesses scale as well. you have the overhang, but as far as the next avenues they can pursue beyond just food, i think health care, personal-care products is ripe for the taking. potentially see an acquisition on that front. that is another massive industry. think about drugs and all the
personal products you have partially being fulfilled on amazon, but it can definitely be taken to a whole other level. caroline: typing and analyst recommendations and you see how many buy ratings remain on amazon and how many few sale ratings are are and the price continues to escalate as we continue to see price target slightly continuing to go higher receipt the line, likelihood of the 12 month target and the selloff just hitting amazon slightly. we are certainly not seeing any sales from the analyst. oryou have the regulatory, do you think amazon will continue to become the -- >> given everything we were talking about earlier, they will be what the regulators are looking at. it is really obvious.
i think i have so much consumer data and transaction will data -- transactual data, there is a lot of ripe fruit. if the regulators are doing it to really try to take any battle to try to bring the company down a bit, there will be a lot of material there for them. finally, facebook, twitter and snapchat want to be able to show video clips from the world cup next year. the companies have offered 21st century fox tens of millions of dollars. box holds the u.s. broadcast rights for the world cup. -- fox holds the u.s. broadcast rights. all this week will have special programming on bloomberg tv, radio, and the web protect week. --for tech week. all episodes of "best of